Samsung announces Q4 2018 earning guidance, operating profit down 29%

Samsung has had a bad quarter and the next one won't be great either

Samsung has had a bad quarter and the next one won't be great

Earlier in the day, Samsung estimated a 29 percent drop in quarterly profit, its first decline in two years, as it flagged tough memory chip and mobile phone markets.

Samsung estimates operating profit for the period from October to December 2018 to 10.8 trillion Won (€8.4 billion).

But analyst Kim Sun-woo of Meritz Securities said worsening supply and demand conditions for semiconductors and the structural challenges facing Samsung's smartphone business will drag down the firm's profits throughout 2019.

The new figure was below market consensus of about 13.5 trillion won, according to market researcher FnGuide.

Samsung's revenue also likely dipped 11% during the quarter to $52.5 billion, according to Bloomberg.

After reporting record profit in the third quarter, Samsung expects a dramatic decline in its fourth-quarter profit due to lackluster demand for chips and intensifying competition in the smartphone market. The same story points the finger at the trade aggro between the United States and China as a major reason for the drop off, citing reduced demand for memory chips which are a big thing for Samsung.

As for the smartphone market, Samsung said it expects to boost its prospects with foldable and 5G handsets.

DRAMeXchange anticipates memory chip prices to fall 10 percent on an average in the first quarter.

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Despite being the world's largest smartphone manufacturer, Samsung's sales are close to negligible in China.

Despite the slumping fourth-quarter earnings, the South Korean company's operating profit for the whole year of 2018 reached a new high of 2.7 trillion won (2.4 billion US dollars).

Shares in Samsung opened down 1.9 percent but have since turned positive.

"We believe the economic environment in China has been further impacted by rising trade tensions with the United States".

'But these Samsung results are quite damning suggesting there.

Statistics also showed that Huawei Technologies Co Ltd continued to lead China's smartphone market during the third quarter of a year ago, with a 23 percent market share, followed by Vivo and Oppo, which account for 21 percent respectively.

Despite recording its highest ever profits in Q3 2018, things are no longer looking as rosy for Samsung.

It is also set to introduce the world's first bendable smartphone in the first half.

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